Fortunately, on this front, there is good news, if only we have the will to be serious. Ethanol and methanol are practical liquid fuels that can be handled by the existing fuel distribution infrastructure and produced at prices roughly competitive with gasoline. [...]
What is needed is government action to break the vertical monopoly on the automobile fuel supply currently held by the petroleum cartel. This could most efficiently be done simply by mandating that all new cars—whether of foreign or domestic manufacture—sold in the United
States be “flex-fueled.” Such cars, which can run on any mixture of alcohol or gasoline, are currently being produced in the United States for little more (typically an extra $100 to $200) than the same vehicles in non-flex-fueled form. But they only command about 3 percent of the market, because there are so few high-alcohol gas pumps to serve them. Conversely, the reason why there are few high-alcohol pumps is because there are not enough flex-fuel cars on the road to warrant them. If you own a fuel station with three pumps, you are not going to waste one distributing a type of fuel that only 3 percent of cars can use.
Yet within three years of a flex-fuel mandate, there would be at least
50 million cars on the road in the United States capable of using high-alcohol fuel, and at least an equal number overseas. This would be a sufficient market to create a widespread network of high-alcohol fuel pumps. Moreover, this dramatically increased demand for alcohol fuels would greatly exceed the supply capacity of American corn-ethanol producers, which means that we could drop our current tariffs against
Latin American sugar-ethanol. A similar circumstance would pertain in
Europe and Japan, enabling the elimination of their protectionist measures against Third World agricultural imports. This would solve the problem of trade barriers against farm products that scuttled the recent Doha round of international trade talks, thus benefiting rich and poor nations alike.